U.S. Bureau of Labor Statistics

Occupational Pay Comparisons Among Metropolitan Areas News Release

For release: 10:00 A.M. (EDT) USDL-10-0994
THURSDAY, JULY 22, 2010
Technical information:
(202) 691-6199 NCSinfo@bls.gov http://www.bls.gov/ncs
Media contact:
(202) 691-5902 PressOffice@bls.gov
OCCUPATIONAL PAY COMPARISONS AMONG METROPOLITAN AREAS, 2009
Average pay for civilian workers in the San Jose-San Francisco-Oakland, CA metropolitan area was
20 percent above the national average in 2009, one of 77 metropolitan areas studied by the National
Compensation Survey (NCS), the Bureau of Labor Statistics of the U.S. Department of Labor reported
today. The Brownsville-Harlingen, TX metropolitan area had a pay relative of 79, meaning workers
earned an average of 79 cents for every dollar earned by workers nationwide. Using data from the NCS,
pay relatives--a means of assessing pay differences--are available for each of the nine major occupational
groups within surveyed metropolitan areas, as well as averaged across all occupations for each area.
The average pay relative nationally for all occupations and for each occupational group equals 100.
(See table 1.)
A pay relative is a calculation of pay--wages, salaries, commissions, and production bonuses--for
a given metropolitan area relative to the nation as a whole. The calculation controls for differences
among areas in occupational composition, establishment and occupational characteristics, and the fact that
data are collected for areas at different times during the year. Simple pay comparisons calculating the
ratio of the average pay for an area to the entire United States in percentage terms would not control
for interarea differences in occupational composition and other factors, which may impact pay relatives.
Chart 1 above lists selected metropolitan area pay relatives compared to average pay nationally among
those studied in the NCS. Table A provides selected metropolitan area pay relatives for each of nine
major occupational groups. In addition, area-to-area comparisons have been calculated for all 77
metropolitan areas and are available on the BLS website at http://www.bls.gov/ncs/ocs/payrel.htm.
Table A. Selected metropolitan area-to-national pay relatives for nine major occupational groups, July 2009
(of 77 metropolitan areas surveyed)
Major Occupational Group Metropolitan Area Pay Relative
Management, business, and financial New York-Newark-Bridgeport, NY-NJ-CT-PA 117
San Jose-San Francisco-Oakland, CA 113
Professional and related Salinas, CA 120
San Jose-San Francisco-Oakland, CA 120
Service San Jose-San Francisco-Oakland, CA 125
Salinas, CA 124
Sales and related Salinas, CA 124
San Jose-San Francisco-Oakland, CA 124
Office and administrative support San Jose-San Francisco-Oakland, CA 120
New York-Newark-Bridgeport, NY-NJ-CT-PA 116
Construction and extraction Chicago-Naperville-Michigan City, IL-IN-WI 132
New York-Newark-Bridgeport, NY-NJ-CT-PA 130
Installation, maintenance, and repair Salinas, CA 122
Denver-Aurora-Boulder, CO 116
San Jose-San Francisco-Oakland, CA 116
Production Sacramento-Arden-Arcade-Truckee, CA-NV 117
Seattle-Tacoma-Olympia, WA 117
Transportation and material moving Minneapolis-St. Paul-St. Cloud, MN-WI 115
Providence-New Bedford-Fall River, RI-MA 113
The pay relative for construction and extraction occupations in the Chicago-Naperville-Michigan
City, IL-IN-WI area was 132, meaning the pay in the Chicago metropolitan area for that occupational group
averaged 32 percent more than the national average pay for that occupational group. By contrast, the pay
relative for workers in construction and extraction in the Brownsville-Harlingen, Texas area was 67,
meaning pay for workers in those occupations averaged 33 percent less than the national average.
(See table 1.)
Yearly differences in area and occupational group pay relatives do not infer changes in underlying
economic conditions.

TECHNICAL NOTE
Pay relative controls and calculations
Pay relatives control for differences among areas in occupational composition as well as
establishment and occupational characteristics. Metropolitan areas often differ greatly in the
composition of establishments and occupations that are available to the local workforce. For example,
in Brownsville-Harlingen, Texas, the ratio of workers in the high-paying management, business, and
financial occupational group to the number of workers in all occupations is under 6 percent, whereas
nationally this ratio is over 9 percent.1 In addition to these factors, the NCS collects compensation
data for metropolitan areas at different times during the year. Payroll reference dates differ between
areas, which makes direct comparisons between areas difficult.
The pay relative approach controls for these differences to isolate the geographic effect on wages.
To illustrate the importance of controlling for these effects, consider the following example. The
average pay for construction and extraction workers in the Chicago-Naperville-Michigan City, IL-IN-WI
metropolitan area in 2009 was $32.15 and in the United States, $20.98.2 A simple pay comparison can be
calculated from the ratio of the two average pay levels, multiplied by 100 to express the comparison as
a percentage. The pay comparison in the example is calculated as:
($32.15 ÷ $20.98) × 100 ≅ 153
This comparison does not control for differences between Chicago and the nation in the mix of
occupations, industries, and other factors. A more accurate estimate of the geographic effect of wages
in Chicago can be obtained by taking these differences into account. Controlling for differences in
occupational composition, establishment and occupational characteristics, and the payroll reference date
in Chicago relative to the nation as a whole, the pay relative for construction and extraction occupations
in Chicago is 132.
Survey methodology
Pay relatives were estimated using a multivariate regression technique designed to control for
interarea differences. This technique controls for the following ten characteristics:
- Occupational type
- Industry type
- Work level
- Full-time / part-time status
- Time / incentive status
- Union / nonunion status
- Ownership type
- Profit / non-profit status
- Establishment employment
- Payroll reference date
Even accounting for the characteristics used in the current regression analysis, there is still wage
variation across the areas. The variation is due to differences in wage determinants that were not
included in the model. Examples of these determinants include price levels, environmental amenities such
as a pleasant climate, and cultural amenities.
Historical pay relatives data are available for the survey years 1992-1996, 1998, 2002, 2004-2008.
There are several differences between the recent pay relatives and the pay relatives for earlier years,
including different industry and occupation classification systems, varying methodology, and different
survey designs. These differences limit comparability. The pay relatives since 2004 have been calculated
using the same industry and occupation classification systems, methodology, and survey design.
Nonetheless, comparisons between the estimates for these years should be made only with caution.
For more details on survey design, methodology, classification systems, recent changes in the survey,
and appropriate use and limitations of the data, see BLS Handbook of Methods, Chapter 8, "National
Compensation Measures," available on the Internet at http://www.bls.gov/opub/hom/homch8_a.htm, especially
the major section "Area-to-Nation and Area-to-Area Pay Comparisons."
Obtaining information
Articles, bulletins, and other information from the National Compensation Survey may be obtained by
calling (202) 691-6199, sending email to NCSinfo@bls.gov, or visiting the Internet site
http://www.bls.gov/ncs. Information in this release will be made available to sensory impaired
individuals upon request. Voice phone: (202) 691-5200; Federal Relay Service Number: 1-800-877-8339.
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Footnotes
(1) Data for this example are based on the May 2009 Metropolitan and Nonmetropolitan Area
Occupational Employment and Wage Estimates, on the Internet at
http://www.bls.gov/oes/current/oessrcma.htm.
(2) Average pay for construction and extraction workers in Chicago and for the United States are based
on wage estimates published in the Chicago-Naperville-Michigan City, IL-IN-WI National Compensation
Survey, October 2009 and the National Compensation Survey: Occupational Wages in the United States, 2009,
on the Internet at http://www.bls.gov/ncs/ocs/compub.htm.